Correlation Between Alpha Tau and Bristol Myers

Can any of the company-specific risk be diversified away by investing in both Alpha Tau and Bristol Myers at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Alpha Tau and Bristol Myers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alpha Tau Medical and Bristol Myers Squibb, you can compare the effects of market volatilities on Alpha Tau and Bristol Myers and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Alpha Tau with a short position of Bristol Myers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Tau and Bristol Myers.

Diversification Opportunities for Alpha Tau and Bristol Myers

0.19

Correlation Coefficient

Alpha Tau  Bristol Myers

Average diversification

The 3 months correlation between Alpha and Bristol is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Tau Medical and Bristol Myers Squibb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristol Myers Squibb and Alpha Tau is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Alpha Tau Medical are associated (or correlated) with Bristol Myers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristol Myers Squibb has no effect on the direction of Alpha Tau i.e., Alpha Tau and Bristol Myers go up and down completely randomly.

Pair Corralation between Alpha Tau and Bristol Myers

Given the investment horizon of 90 days Alpha Tau Medical is expected to generate 4.37 times more return on investment than Bristol Myers. However, Alpha Tau is 4.37 times more volatile than Bristol Myers Squibb. It trades about 0.0 of its potential returns per unit of risk. Bristol Myers Squibb is currently generating about -0.07 per unit of risk. If you would invest  573.00  in Alpha Tau Medical on February 1, 2024 and sell it today you would lose (323.00) from holding Alpha Tau Medical or give up 56.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alpha Tau Medical  vs.  Bristol Myers Squibb

Alpha Tau Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha Tau Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bristol Myers Squibb

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bristol Myers Squibb has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Alpha Tau and Bristol Myers

The main advantage of trading using opposite Alpha Tau and Bristol Myers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Tau position performs unexpectedly, Bristol Myers can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bristol Myers will offset losses from the drop in Bristol Myers' long position.

The idea behind Alpha Tau Medical and Bristol Myers Squibb pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.